Renting - why do tenants get ripped off?

Butterfliesarepretty

I have never rented a house but if I did leave my two bed terraced (double glazing, furniture, central heating, electric and gas) I would just charge for the mortgage eg mine is £350 a month then add my gas and electric which is £46 a month.

Why is it that renting is so expensive and yet they expect the tenant to pay for their own gas and electric. Surely its easier to control the gas and electric yourself and reflect that in the rent per month.

Terraced houses are going for £450-£600 per month. I know the market for first time buyers is hard but what about those people who bought theirs six years ago or so say £34,000 and have a small mortgage yet they charge the earth to rent?:eek:

Just don't get it - or am I missing something. I prefer to be honest and not overcharge people.

sooz

shawtj2 wrote: »

I have never rented a house but if I did leave my two bed terraced (double glazing, furniture, central heating, electric and gas) I would just charge for the mortgage eg mine is £350 a month then add my gas and electric which is £46 a month.

what if your mortgage was £700 a month? Would that then be a fair rent?

You have also forgotten about insurance, maintenance, gas safety checks, tenant referencing, inventories and many other things you would also have to pay for as a landlord. Also, does your furniture meet letting standards? Does it have the correct safety labels to show it is fire resistant? If not, budget to throw it all out (or pay someone to take it away) and buy new stuff. Don't forget that your mortgage will go up when you tell the company it's a BTL, as will the insurance.

Why is it that renting is so expensive and yet they expect the tenant to pay for their own gas and electric. Surely its easier to control the gas and electric yourself and reflect that in the rent per month.

Gas an electricity depends on how much you use. If it is included, you tend to use more, or leave it on all the time

Terraced houses are going for £450-£600 per month. I know the market for first time buyers is hard but what about those people who bought theirs six years ago or so say £34,000 and have a small mortgage yet they charge the earth to rent?:eek:

The market rent is determined by what renters are prepared to pay for the property, not by what the purchase price was.

Just don't get it - or am I missing something. I prefer to be honest and not overcharge people.

You might think that by only charging your mortgage and current utility bills you would be being honest, but you would be subsiding your tenants, and very quickly end up out of pocket

moneysavinmonkey

the level of rent is set by the market and dictate by the position of the property, demand, what potential tenants can afford etc.

The tenant does not care what your mortgage costs are... that is for the landlord to work out whether it is a worthwhile investment.

Historically rents always used to be higher than mortgages and this reflected the fact that mortgages were difficult to get (you had to get on well with your bank manager!), there are certain benefits to such as not having to pay for repairs, maintenance or decorating, having security of tenure yet flexibility to move etc.

As these days houses are so overpriced it tends to be that you can rent a house for much less than the mortgage so many people choose to do this as it suits their circumstances and allows them to save a lot more money compared so that when they do want to buy they will have a bigger deposit and a smaller mortgage.

The reason people don't do what you are suggesting is that they are in it to make money!

moneysavinmonkey

Oh and the reason why most tenancies don't include the electricity/gas is because there is a risk that the tenant would abuse this - ie why fork out for energy saving light-bulbs if you don't pay the bills.

Doozergirl

OP, I'd stick to your day job, hun. It's a beautifully naive way of thinking but it doesn't make any real sense at all. You would let someone live in your home for the amount it costs you

Apart from what sooz says, what about the interest you lose by having equity in your property - would you hand that to a stranger if you had that money in the bank? Because that is what you would effectively be doing. And what about the sheer stress and admin time of running a business? Is that free to the tenant too?

Many landlords are already subsidising their tenants even at full market rents. If you added it all up and took into account current markete value and lost interest, on most properties, you'd find that you're lucky to break even.

By the way, if your tenant didn't pay the rent and the bills are in your name, guess who is liable for the bill for their overenthusiatic utilities usage?! More simple?

melancholly

shawtj2 wrote: »

Why is it that renting is so expensive and yet they expect the tenant to pay for their own gas and electric. Surely its easier to control the gas and electric yourself and reflect that in the rent per month.

as a private tennant, i can't imagine signing up to live somewhere where a non-resident LL tried to tell me when i could turn on the CH!! if it's included, then the LL can't determine how much gets used and they may well lose money on it.

moneysavinmonkey

I lived in a house once where the heating was included... the landlord every-time she visited would turn down the central heating and even adjust the timings. She decided that we didn't need the heating on in the day as we were out at work - what she failed to realise is that we didn't all work monday to friday. We didn't renew our tenancy when she tried to double the rent to cover the cost of electricity + gas (she couldn't understand why we used so much compared to when she lived there)

Butterfliesarepretty

Yes maybe I am being a bit naive. I am just too honest. Ok so if the tenants pay their own gas and electric, but isn't it fair to only expect them to pay the actual mortgage cost each month?? If anything goes wrong with the house - you are the owner of the house say (slates fell off the roof) that is not the tenants responsibility as they are not the house owner. I would feel cheeky charging them more of things they did not cause!


Eg I have a mortgage of £46,000 and pay £350 a month. that is what I would charge them because even if say the boiler goes faulty ? (I would pay that myself out of my own budget while living in and owning the house). I certainly would not expect them to pay for it (so why increase the rent to cover that?)

lynzpower

if you are changing your mortgage many lenders will want to see 125% minimum covered. Therefore the rent you charge should be 25% more than the mortgage.

Also specialist buildings cover for letting your property out- thats an overhead.

As is your time
*doing your tax returns,
*sorting out maintainence issues ( eg a call out can be 200 quid easy)
*visinting the property
*lettings costs ie what you pay your LA even if its just finding someone thats a cost
*fire regulations and ensuring they are covered
*do LLs now have to have a hip, i think so
and so on and so on!

plenty of hidden costs you need to cover as a LL so you dont subsidise tenants

plus of course having extra in the bank to pay the mortgage ( 3 months is usual, more is advised) if the property isnt lt, or tenants dont pay/do a bunk etc.

real1314

OP, could you perhaps rent a car to me under this scheme?

You put down a 25% deposit and then get a loan for the other 75%.
You pay the insurance (as with the house), MOT (like the Gas Safety Check)and repairs (Like you would on the house). Not sure who'll pay the tax yet?
Will you pay for the fuel too (like Gas / Electric)

I'll pay you a monthly fee equivalent to the cost of the loan only.
Let me know which cars you can offer!

Ok?

PasturesNew

I'm intrigued what land the OP lives in.

OP - what is your job?
Perhaps you can ask your boss to pay you what the clients pay him when your services are used. Or if you work in a shop, perhaps you can ask your boss for the price list that he pays for goods, then get paid the difference between what the customers are paying and what it costs your boss (less VAT of course because he claims that back and it would be cheeky if he charged you VAT)